The USD/JPY pair builds on this week's breakout momentum through the 145.00 psychological mark and climbs to a fresh YTD top during the Asian session
on Thursday. Spot prices currently trade around mid-146.00s, up 0.10% for the day, and remain well supported by the underlying bullish sentiment surrounding the US Dollar.
The USD Index , which tracks the Greenback against a basket of currencies, touches its highest level since July 6 and validates the overnight break through the very important 200-day Simple Moving Average for the first time since November 30. The stronger US macro data released on Wednesday – Housing Starts and Industrial Production figures – and a more hawkish Federal Reserve continue to act as a tailwind for the buck.
The minutes of the July 25-26 FOMC policy meeting signalled that a further rate hike remains in play later this year. Moreover, Fed officials no longer expect a “mild” recession this year, reaffirming market bets for higherfor longer rates, pushing the US Treasury bond yields higher. In fact, the yield on the benchmark 10-year US government bond jumps to its highest level since October and is seen underpinning the USD.
Spot prices, meanwhile, have moved beyond the level that triggered an intervention by Japanese authorities in September and October last year. Moreover, Japan's topdiplomat Masato Kanda said on Tuesday that he would take appropriate steps against excessive currency moves. Japan's Finance Minister Shunichi Suzuki, however, said that authorities are not targeting absolute currency levels when it comes to intervening in the market.
Apart from this, the prevalent risk-off environment might lend some support to the safe-haven JPY and hold back traders from placing fresh bullish bets. Market participants now look to the, featuring the release of the usual Weekly Initial Jobless Claims data and the Philly Fed Manufacturing Index later during the early North American session.
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